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Changes to NJ Brownfield Funding Program

Mon, 04/09/2018 - 13:41

A little-noticed bill that was passed at the end of 2017 made significant changes to the NJ Hazardous Discharge Site Remediation Fund (HDSRF) grant and loan program. The legislation,  A1954 signed into law on 1/15/18. Below are a summary of the changes. Thanks to our friends at the Brownfield Coalition of the Northeast (BCONE) for providing us with this information. These changes will be discusses at the  9th Northeast Sustainable Communities Workshop to be held on May 23, 2018 at the New Jersey Institute of Technology, Newark, NJ

Fourteen changes by the Brownfields Office at NJDEP are:

  1. 25% matching grants for innovative technology and limited restricted use remedial actions have been eliminated from the program.
  2.  50% matching grants for innocent parties have been eliminated.
  3. Annual grant caps to municipal/county/redevelopment authorities are reduced from $3,000,000 to $2,000,000.
  4. The additional grant amount permitted in a Brownfield Development Area (BDA) is reduced from $2,000,000 to $1,000,000.
  5.  Annual loans caps are reduced from $1,000,000 per year to $500,000 per year.
  6. The statewide annual award cap for recreation/conservation; affordable housing; and renewable energy grants is reduced from $5,000,000 to $2,500,000.
  7. At least 30% of the moneys in the fund shall be allocated for grants to municipalities, counties, or redevelopment entities for PAs, SIs, RIs, and RAs of a site not located in a BDA.
  8. Moves sites in Planning Areas 1 and 2 down to the third priority from the second and makes BDAs the second priority.
  9.  Readiness to proceed has been added as a factor in prioritization of applications.
  10. NJEDA’s annual reporting requirements are to include the amount of remediation costs expended for each site for the previous calendar year and the remaining balance.
  11. NJEDA is required to adopt criteria for public entities that indicates that the property will be developed within a 3 year period from completion of the remediation.
  12. Places timeframes for completing remediation steps based on the date the grant is awarded for:

a. Preliminary Assessments or Site Investigation at 2 years after the date of the award.

b. Remedial Investigations at 5 years after the date of the award.

Failure to complete the task will result in cancellation of the award.

13. Requires the applicant of a supplement grant to demonstrate that the previous grant/loan award was fully expended or will be fully expended.
14. The law took effect on 1/15/18 and applies to any application for financial assistance or a grant from the HDSRF pending before the DEP on the effective date of the law or submitted on or after the effective date. It does not apply to any application determined to be technically eligible and recommended for funding by the DEP and pending before NJEDA on the effective date.

A summary of the changes for private party grants and loans is Attached

 

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Categories: Law and Legal

JP Morgan Chase Actually Acquired “Toxic” Assets During the Great Recession

Sun, 03/04/2018 - 01:36

During the Great Recessions, the term “toxic assets” became a cliché. It was used to describe loans and other financial instruments that had fallen significantly and for which there is no longer a functioning market. The presence of these so-called toxic assets on their balance sheets caused many banks to fail.

As it turned out, JPMC actually acquired some toxic assets in the more traditional sense when it purchased the acquired the insolvent Washington Mutual Bank (WMB). As a result of this transaction, the bank eventually entered into a series of consent orders with United States and the California Department of Toxic Substances Control (DTSC) to resolve the liability of WMB and various predecessors involving the former BKK Sanitary Landfill Site  in West Covina, California. Under the consent order JPMC agreed to pay $27 million to the DTSC for its past response costs and remaining $58 million to the PRP steering committee. In addition, JPMC paid DTSC $1 million for attorney fees and other costs incurred related to the Consent Decree. In the federal consent agreement, JPMC agreed t pay to EPA  $1MM for past response costs.

The story began back in 1959 when Home Savings of America FSB (“Home Savings”) purchased land in West Covina, California. In 1963, Home Savings leased a portion of the landfill to BKK Corp., which developed and operated the a landfill that accepted both solid waste and hazardous wastes. Around 1973, Home Savings transferred title to the BKK Facility to a subsidiary, Oxford Investment Corp. (“Oxford”) which held title until approximately 1977 when BKK Corp. exercised a lease option to acquire title to the facility.

In 1995, Oxford became a direct subsidiary of H.F. Ahmanson & Company, the parent corporation of Home Savings. Oxford was subsequently renamed Ahmanson Developments Inc.  In 1998, H.F. Ahmanson &c Company merged into Washington Mutual Inc (WMI), which was the parent corporation of WMB. As part of that transaction, Home Savings merged into WMB, and Ahmanson Developments Inc., became a direct subsidiary of WMI.

In 2004, NAMCO Securities Corp., a subsidiary of WMB, loaned BKK Corp. money to assist BKK Corp. with maintaining its post-foreclosure financial assurance. However, BKK Corp. notified DTSC later that year that it could no longer perform its post-closure obligations for the closed hazardous waste landfill or operate the Leachate Treatment Plant.

DTSC was forced to retain a contractor to conduct emergency response activities at the BKK Facility. The agency then issued an Imminent and Substantial Endangerment Determination and Order and Remedial Action Order (ISE Order) to BKK Corp. and approximately fifty (50) other parties including WMB.

DTSC subsequently entered into a series of administrative settlement agreements with some of the PRPs named in the ISE Order. WMB was one of the settling respondents. DTSC later filed an action for cost recovery against 25 PRPs including WMB which resulted in a consent order that required the settling defendants to undertake various actions regarding the BKK site and to reimburse DTSC for certain costs it had incurred or would incur in the future related to the Subject Property.

After the Office of Thrift Supervision closed WMB and appointed FDIC as the receiver, WMI and WMI Investment Corp. commenced a chapter 11 petition. DTSC, the PRP steering committee and certain of its members filed proofs of claim in the WMB Receivership alleging that WMB and its subsidiaries or affiliates were liable for response costs and other damages associated with the BKK Facility. These claims were disallowed.

In 2012, the Bankruptcy Court approved a settlement agreement whereby the settling parties agreed, among other things, that JPMC would fund the obligations of the WMI Entities for Response Costs associated with the BKK Facility and act as their agent for certain insurance policies. Interestingly, the settlement agreement provided that the automatic stay would be lifted to the limited extent required to determine WMI’s liability for response costs related to the BKK Facility.

The Schnapf Environmental Journal that was published from 1998 to 2008 and is available from the newsletter page of this website discussed a number of instances where lenders incurred environmental liability as a result of acquisitions. For example, the 2002 September issue discussed Citibank’s liability for the Shattuck Chemical Company. The December 2004  issue covered the listing of a bank branch office to the federal superfund list.

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Categories: Law and Legal